Delaware
(State or other jurisdiction of
incorporation or organization)
|
|
46-5670947
(I.R.S. Employer
Identification No.)
|
|
|
|
9200 Oakdale Avenue, Suite 900
Los Angeles, California
(Address of principal executive offices)
|
|
91311
(Zip Code)
|
Large Accelerated Filer
|
o
|
Accelerated Filer
|
þ
|
Non-Accelerated Filer
|
o
|
Smaller Reporting Company
|
o
|
Emerging Growth Company
|
o
|
|
|
Shares of common stock outstanding as of June 30, 2018
|
48,352,957
|
|
Page
|
|
Part I
|
|
|
Item 1
|
Financial Statements (unaudited)
|
|
|
Condensed Consolidated Balance Sheets
|
|
|
Condensed Consolidated Statements of Operations
|
|
|
Condensed Consolidated Statements of Comprehensive Income
|
|
|
Condensed Consolidated Statements of Cash Flows
|
|
|
Condensed Consolidated Statements of Equity
|
|
|
Notes to the Condensed Consolidated Financial Statements
|
|
Item 2
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
|
|
General
|
|
|
Business Environment and Industry Outlook
|
|
|
Seasonality
|
|
|
Joint Ventures
|
|
|
Acquisitions and Divestitures
|
|
|
Operations
|
|
|
Fixed and Variable Costs
|
|
|
Production and Prices
|
|
|
Balance Sheet Analysis
|
|
|
Statements of Operations Analysis
|
|
|
Liquidity and Capital Resources
|
|
|
2018 Capital Program
|
|
|
Lawsuits, Claims, Contingencies and Commitments
|
|
|
Significant Accounting and Disclosure Changes
|
|
|
Safe Harbor Statement Regarding Outlook and Forward-Looking Information
|
|
Item 3
|
Quantitative and Qualitative Disclosures About Market Risk
|
|
Item 4
|
Controls and Procedures
|
|
|
|
|
Part II
|
|
|
Item 1
|
Legal Proceedings
|
|
Item 1A
|
Risk Factors
|
|
Item 5
|
Other Disclosures
|
|
Item 6
|
Exhibits
|
Item 1.
|
Financial Statements (unaudited)
|
|
June 30,
|
|
December 31,
|
||||
|
2018
|
|
2017
|
||||
CURRENT ASSETS
|
|
|
|
||||
Cash
|
$
|
42
|
|
|
$
|
20
|
|
Trade receivables
|
282
|
|
|
277
|
|
||
Inventories
|
63
|
|
|
56
|
|
||
Other current assets, net
|
172
|
|
|
130
|
|
||
Total current assets
|
559
|
|
|
483
|
|
||
PROPERTY, PLANT AND EQUIPMENT
|
22,146
|
|
|
21,260
|
|
||
Accumulated depreciation, depletion and amortization
|
(15,812
|
)
|
|
(15,564
|
)
|
||
Total property, plant and equipment, net
|
6,334
|
|
|
5,696
|
|
||
OTHER ASSETS
|
47
|
|
|
28
|
|
||
TOTAL ASSETS
|
$
|
6,940
|
|
|
$
|
6,207
|
|
CURRENT LIABILITIES
|
|
|
|
||||
Accounts payable
|
330
|
|
|
257
|
|
||
Accrued liabilities
|
563
|
|
|
475
|
|
||
Total current liabilities
|
893
|
|
|
732
|
|
||
LONG-TERM DEBT
|
5,075
|
|
|
5,306
|
|
||
DEFERRED GAIN AND ISSUANCE COSTS, NET
|
265
|
|
|
287
|
|
||
OTHER LONG-TERM LIABILITIES
|
617
|
|
|
602
|
|
||
MEZZANINE EQUITY
|
|
|
|
||||
Redeemable noncontrolling interest
|
735
|
|
|
—
|
|
||
EQUITY
|
|
|
|
||||
Preferred stock (20 million shares authorized at $0.01 par value) no shares outstanding at June 30, 2018 and December 31, 2017
|
—
|
|
|
—
|
|
||
Common stock (200 million shares authorized at $0.01 par value) outstanding shares (June 30, 2018 - 48,352,957 and December 31, 2017 - 42,901,946)
|
—
|
|
|
—
|
|
||
Additional paid-in capital
|
4,985
|
|
|
4,879
|
|
||
Accumulated deficit
|
(5,754
|
)
|
|
(5,670
|
)
|
||
Accumulated other comprehensive loss
|
(20
|
)
|
|
(23
|
)
|
||
Total equity attributable to common stock
|
(789
|
)
|
|
(814
|
)
|
||
Noncontrolling interests
|
144
|
|
|
94
|
|
||
Total equity
|
(645
|
)
|
|
(720
|
)
|
||
TOTAL LIABILITIES AND EQUITY
|
$
|
6,940
|
|
|
$
|
6,207
|
|
|
Three months ended
June 30, |
|
Six months ended
June 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
REVENUES AND OTHER
|
|
|
|
|
|
|
|
||||||||
Oil and gas sales
|
$
|
657
|
|
|
$
|
439
|
|
|
$
|
1,232
|
|
|
$
|
926
|
|
Net derivative (loss) gain from commodity contracts
|
(167
|
)
|
|
43
|
|
|
(205
|
)
|
|
116
|
|
||||
Other revenue
|
59
|
|
|
34
|
|
|
131
|
|
|
64
|
|
||||
Total revenues and other
|
549
|
|
|
516
|
|
|
1,158
|
|
|
1,106
|
|
||||
|
|
|
|
|
|
|
|
||||||||
COSTS AND OTHER
|
|
|
|
|
|
|
|
||||||||
Production costs
|
231
|
|
|
216
|
|
|
443
|
|
|
427
|
|
||||
General and administrative expenses
|
90
|
|
|
59
|
|
|
153
|
|
|
122
|
|
||||
Depreciation, depletion and amortization
|
125
|
|
|
138
|
|
|
244
|
|
|
278
|
|
||||
Taxes other than on income
|
37
|
|
|
31
|
|
|
75
|
|
|
64
|
|
||||
Exploration expense
|
6
|
|
|
6
|
|
|
14
|
|
|
12
|
|
||||
Other expenses, net
|
49
|
|
|
25
|
|
|
110
|
|
|
47
|
|
||||
Total costs and other
|
538
|
|
|
475
|
|
|
1,039
|
|
|
950
|
|
||||
OPERATING INCOME
|
11
|
|
|
41
|
|
|
119
|
|
|
156
|
|
||||
|
|
|
|
|
|
|
|
||||||||
NON-OPERATING (LOSS) INCOME
|
|
|
|
|
|
|
|
||||||||
Interest and debt expense, net
|
(94
|
)
|
|
(83
|
)
|
|
(186
|
)
|
|
(167
|
)
|
||||
Net gain on early extinguishment of debt
|
24
|
|
|
—
|
|
|
24
|
|
|
4
|
|
||||
Gain on asset divestitures
|
1
|
|
|
—
|
|
|
1
|
|
|
21
|
|
||||
Other non-operating expenses
|
(5
|
)
|
|
(5
|
)
|
|
(12
|
)
|
|
(9
|
)
|
||||
(LOSS) INCOME BEFORE INCOME TAXES
|
(63
|
)
|
|
(47
|
)
|
|
(54
|
)
|
|
5
|
|
||||
Income tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
NET (LOSS) INCOME
|
(63
|
)
|
|
(47
|
)
|
|
(54
|
)
|
|
5
|
|
||||
Net income attributable to noncontrolling interests
|
(19
|
)
|
|
(1
|
)
|
|
(30
|
)
|
|
—
|
|
||||
NET (LOSS) INCOME ATTRIBUTABLE TO COMMON STOCK
|
$
|
(82
|
)
|
|
$
|
(48
|
)
|
|
$
|
(84
|
)
|
|
$
|
5
|
|
|
|
|
|
|
|
|
|
||||||||
Net (loss) income attributable to common stock per share
|
|
|
|
|
|
|
|
||||||||
Basic and diluted
|
$
|
(1.70
|
)
|
|
$
|
(1.13
|
)
|
|
$
|
(1.81
|
)
|
|
$
|
0.12
|
|
|
Three months ended
June 30, |
|
Six months ended
June 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Net (loss) income
|
$
|
(63
|
)
|
|
$
|
(47
|
)
|
|
$
|
(54
|
)
|
|
$
|
5
|
|
Other comprehensive income items:
|
|
|
|
|
|
|
|
||||||||
Reclassification of realized losses on pension and postretirement benefits to income
(a)
|
1
|
|
|
—
|
|
|
3
|
|
|
3
|
|
||||
Total other comprehensive income
|
1
|
|
|
—
|
|
|
3
|
|
|
3
|
|
||||
Comprehensive income attributable to noncontrolling interests
|
(19
|
)
|
|
(1
|
)
|
|
$
|
(30
|
)
|
|
$
|
—
|
|
||
Comprehensive (loss) income attributable to common stock
|
$
|
(81
|
)
|
|
$
|
(48
|
)
|
|
$
|
(81
|
)
|
|
$
|
8
|
|
(a)
|
No associated tax for the
three and six
months ended
June 30, 2018
and 2017. See
Note 11 Pension and Postretirement Benefit Plans
, for additional information.
|
|
Six months ended
June 30, |
||||||
|
2018
|
|
2017
|
||||
CASH FLOW FROM OPERATING ACTIVITIES
|
|
|
|
||||
Net (loss) income
|
$
|
(54
|
)
|
|
$
|
5
|
|
Adjustments to reconcile net income to net cash provided by
operating activities:
|
|
|
|
||||
Depreciation, depletion and amortization
|
244
|
|
|
278
|
|
||
Net derivative loss (gain) from commodity contracts
|
205
|
|
|
(116
|
)
|
||
Net (payments) proceeds on settled commodity derivatives
|
(99
|
)
|
|
7
|
|
||
Net gain on early extinguishment of debt
|
(24
|
)
|
|
(4
|
)
|
||
Amortization of deferred gain
|
(38
|
)
|
|
(37
|
)
|
||
Gain on asset divestitures
|
(1
|
)
|
|
(21
|
)
|
||
Other non-cash charges to income, net
|
39
|
|
|
28
|
|
||
Dry hole expenses
|
4
|
|
|
1
|
|
||
Changes in operating assets and liabilities, net
|
(42
|
)
|
|
(21
|
)
|
||
Net cash provided by operating activities
|
234
|
|
|
120
|
|
||
|
|
|
|
||||
CASH FLOW FROM INVESTING ACTIVITIES
|
|
|
|
||||
Capital investments
|
(327
|
)
|
|
(132
|
)
|
||
Changes in capital investment accruals
|
22
|
|
|
26
|
|
||
Asset divestitures
|
13
|
|
|
33
|
|
||
Acquisitions
|
(512
|
)
|
|
—
|
|
||
Other
|
(3
|
)
|
|
(1
|
)
|
||
Net cash used in investing activities
|
(807
|
)
|
|
(74
|
)
|
||
|
|
|
|
||||
CASH FLOW FROM FINANCING ACTIVITIES
|
|
|
|
||||
Proceeds from 2014 Revolving Credit Facility
|
1,150
|
|
|
728
|
|
||
Repayments of 2014 Revolving Credit Facility
|
(1,236
|
)
|
|
(733
|
)
|
||
Payments on 2014 Term Loan
|
—
|
|
|
(66
|
)
|
||
Debt repurchases
|
(119
|
)
|
|
(24
|
)
|
||
Debt transaction costs
|
—
|
|
|
(2
|
)
|
||
Contributions from noncontrolling interest holders, net
|
796
|
|
|
49
|
|
||
Distributions paid to noncontrolling interest holders
|
(41
|
)
|
|
(1
|
)
|
||
Issuance of common stock
|
50
|
|
|
1
|
|
||
Shares canceled for taxes
|
(5
|
)
|
|
(1
|
)
|
||
Net cash provided (used) by financing activities
|
595
|
|
|
(49
|
)
|
||
Increase (decrease) in cash
|
22
|
|
|
(3
|
)
|
||
Cash—beginning of period
|
20
|
|
|
12
|
|
||
Cash—end of period
|
$
|
42
|
|
|
$
|
9
|
|
|
Additional Paid-in Capital
|
|
Accumulated Deficit
|
|
Accumulated Other
Comprehensive
(Loss) Income
|
|
Equity Attributable to Common Stock
|
|
Equity Attributable to Noncontrolling Interest
|
|
Total Equity
|
||||||||||||
Balance, December 31, 2016
|
$
|
4,861
|
|
|
$
|
(5,404
|
)
|
|
$
|
(14
|
)
|
|
$
|
(557
|
)
|
|
$
|
—
|
|
|
$
|
(557
|
)
|
Net income
|
—
|
|
|
5
|
|
|
—
|
|
|
5
|
|
|
—
|
|
|
5
|
|
||||||
Contribution from noncontrolling interest holders, net
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
49
|
|
|
49
|
|
||||||
Distributions paid to noncontrolling interest holders
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
(1
|
)
|
||||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
3
|
|
|
3
|
|
|
—
|
|
|
3
|
|
||||||
Share-based compensation, net
|
10
|
|
|
—
|
|
|
—
|
|
|
10
|
|
|
—
|
|
|
10
|
|
||||||
Balance, June 30, 2017
|
$
|
4,871
|
|
|
$
|
(5,399
|
)
|
|
$
|
(11
|
)
|
|
$
|
(539
|
)
|
|
$
|
48
|
|
|
$
|
(491
|
)
|
|
Additional Paid-in Capital
|
|
Accumulated Deficit
|
|
Accumulated Other
Comprehensive
(Loss) Income
|
|
Equity Attributable to Common Stock
|
|
Equity Attributable to Noncontrolling Interest
|
|
Total Equity
(a)
|
||||||||||||
Balance, December 31, 2017
|
$
|
4,879
|
|
|
$
|
(5,670
|
)
|
|
$
|
(23
|
)
|
|
$
|
(814
|
)
|
|
$
|
94
|
|
|
$
|
(720
|
)
|
Net loss
|
—
|
|
|
(84
|
)
|
|
—
|
|
|
(84
|
)
|
|
(13
|
)
|
|
(97
|
)
|
||||||
Contribution from noncontrolling interest holders, net
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
82
|
|
|
82
|
|
||||||
Distributions paid to noncontrolling interest holders
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(19
|
)
|
|
(19
|
)
|
||||||
Issuance of common stock
(b)
|
101
|
|
|
—
|
|
|
—
|
|
|
101
|
|
|
—
|
|
|
101
|
|
||||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
3
|
|
|
3
|
|
|
—
|
|
|
3
|
|
||||||
Share-based compensation, net
|
5
|
|
|
—
|
|
|
—
|
|
|
5
|
|
|
—
|
|
|
5
|
|
||||||
Balance, June 30, 2018
|
$
|
4,985
|
|
|
$
|
(5,754
|
)
|
|
$
|
(20
|
)
|
|
$
|
(789
|
)
|
|
$
|
144
|
|
|
$
|
(645
|
)
|
(a)
|
Excludes redeemable noncontrolling interest recorded in mezzanine equity. See
Note 6 Joint Ventures
for more information.
|
(b)
|
Includes $51 million in shares issued to Chevron in connection with our acquisition of Chevron's working interest in Elk Hills unit. See
Note 7 Acquisitions and Divestitures
for more information.
|
NOTE 2
|
ACCOUNTING AND DISCLOSURE CHANGES
|
NOTE 3
|
OTHER INFORMATION
|
|
June 30,
|
|
December 31,
|
||||
|
2018
|
|
2017
|
||||
|
(in millions)
|
||||||
Amounts due from joint interest partners
|
$
|
86
|
|
|
$
|
76
|
|
Derivative assets from commodities contracts
|
59
|
|
|
23
|
|
||
Prepaid expenses
|
25
|
|
|
19
|
|
||
Asset held for sale
|
—
|
|
|
12
|
|
||
Other
|
2
|
|
|
—
|
|
||
Other current assets, net
|
$
|
172
|
|
|
$
|
130
|
|
|
June 30,
|
|
December 31,
|
||||
|
2018
|
|
2017
|
||||
|
(in millions)
|
||||||
Derivative liabilities from commodities contracts
|
$
|
260
|
|
|
$
|
154
|
|
Accrued taxes other than on income
|
111
|
|
|
130
|
|
||
Accrued employee-related costs
|
77
|
|
|
86
|
|
||
Accrued interest
|
20
|
|
|
23
|
|
||
Other
|
95
|
|
|
82
|
|
||
Accrued liabilities
|
$
|
563
|
|
|
$
|
475
|
|
|
June 30,
|
|
December 31,
|
||||
|
2018
|
|
2017
|
||||
|
(in millions)
|
||||||
Materials and supplies
|
$
|
60
|
|
|
$
|
53
|
|
Finished goods
|
3
|
|
|
3
|
|
||
Total
|
$
|
63
|
|
|
$
|
56
|
|
|
Outstanding Principal
(in millions)
|
|
Interest Rate
|
|
Maturity
|
|
Security
|
||||||
|
June 30, 2018
|
|
December 31, 2017
|
|
|
|
|
|
|
||||
Credit Agreements
|
|
|
|
|
|
|
|
|
|
||||
2014 Revolving Credit Facility
|
$
|
277
|
|
|
$
|
363
|
|
|
LIBOR plus 3.25%-4.00%
ABR plus 2.25%-3.00% |
|
June 30, 2021
|
|
Shared First-Priority Lien
|
2017 Credit Agreement
|
1,300
|
|
|
1,300
|
|
|
LIBOR plus 4.75%
ABR plus 3.75% |
|
December 31, 2022
(a)
|
|
Shared First-Priority Lien
|
||
2016 Credit Agreement
|
1,000
|
|
|
1,000
|
|
|
LIBOR plus 10.375%
ABR plus 9.375% |
|
December 31, 2021
|
|
First-Priority Lien
|
||
Second Lien Notes
|
|
|
|
|
|
|
|
|
|
||||
Second Lien Notes
|
2,153
|
|
|
2,250
|
|
|
8%
|
|
December 15, 2022
(b)
|
|
Second-Priority Lien
|
||
Senior Notes
|
|
|
|
|
|
|
|
|
|
||||
5% Senior Notes due 2020
|
100
|
|
|
100
|
|
|
5%
|
|
January 15, 2020
|
|
Unsecured
|
||
5½% Senior Notes due 2021
|
100
|
|
|
100
|
|
|
5.5%
|
|
September 15, 2021
|
|
Unsecured
|
||
6% Senior Notes due 2024
|
145
|
|
|
193
|
|
|
6%
|
|
November 15, 2024
|
|
Unsecured
|
||
Total
|
$
|
5,075
|
|
|
$
|
5,306
|
|
|
|
|
|
|
|
(a)
|
The 2017 Credit Agreement is subject to a springing maturity of 91 days prior to the maturity of our 2016 Credit Agreement if more than $100 million on the 2017 Credit Agreement is outstanding at that time.
|
(b)
|
The Second Lien Notes require principal repayments of approximately $340 million in June 2021 and $70 million each in December 2021 and June 2022.
|
NOTE 6
|
JOINT VENTURES
|
|
|
|
|
|
Equity Attributable to Noncontrolling Interest
|
|
Mezzanine Equity - Redeemable Noncontrolling Interest
|
||||||||
|
Ares JV
|
|
BSP JV
|
|
Total
|
|
Ares JV
|
||||||||
Balance, December 31, 2017
|
$
|
—
|
|
|
$
|
94
|
|
|
$
|
94
|
|
|
$
|
—
|
|
Net (loss) income attributable to noncontrolling interests
|
(6
|
)
|
|
(7
|
)
|
|
(13
|
)
|
|
43
|
|
||||
Contributions from noncontrolling interest holders, net
|
33
|
|
|
49
|
|
|
82
|
|
|
714
|
|
||||
Distributions to noncontrolling interest holders
|
(2
|
)
|
|
(17
|
)
|
|
(19
|
)
|
|
(22
|
)
|
||||
Balance, June 30, 2018
|
$
|
25
|
|
|
$
|
119
|
|
|
$
|
144
|
|
|
$
|
735
|
|
|
At June 30, 2018
|
||
|
(in millions)
|
||
Consideration:
|
|
||
Cash
|
$
|
462
|
|
Amounts due from Chevron
|
(2
|
)
|
|
Common stock issued (2.85 million shares)
|
51
|
|
|
Liabilities assumed
|
7
|
|
|
|
$
|
518
|
|
|
|
||
Identifiable assets acquired:
|
|
||
Proved properties
|
$
|
435
|
|
Other property and equipment
|
77
|
|
|
Materials and supplies
|
6
|
|
|
|
$
|
518
|
|
|
Q3
2018 |
|
Q4
2018 |
|
Q1
2019 |
|
Q2
2019 |
|
Q3
2019 |
|
Q4
2019 |
|
FY
2020 |
|
FY
2021
|
||||||||||||||||
Sold Calls:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Barrels per day
|
6,127
|
|
|
16,086
|
|
|
16,057
|
|
|
6,023
|
|
|
991
|
|
|
961
|
|
|
503
|
|
|
—
|
|
||||||||
Weighted-average price per barrel
|
$
|
60.24
|
|
|
$
|
58.91
|
|
|
$
|
65.75
|
|
|
$
|
67.01
|
|
|
$
|
60.00
|
|
|
$
|
60.00
|
|
|
$
|
60.00
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Purchased Calls:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Barrels per day
|
—
|
|
|
—
|
|
|
2,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Weighted-average price per barrel
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
71.00
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Purchased Puts:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Barrels per day
|
6,922
|
|
|
1,851
|
|
|
34,793
|
|
|
31,733
|
|
|
11,676
|
|
|
1,623
|
|
|
1,506
|
|
|
574
|
|
||||||||
Weighted-average price per barrel
|
$
|
61.31
|
|
|
$
|
51.70
|
|
|
$
|
62.77
|
|
|
$
|
66.21
|
|
|
$
|
62.79
|
|
|
$
|
49.58
|
|
|
$
|
47.97
|
|
|
$
|
45.00
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Sold Puts:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Barrels per day
|
24,000
|
|
|
19,000
|
|
|
35,000
|
|
|
25,000
|
|
|
10,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Weighted-average price per barrel
|
$
|
46.04
|
|
|
$
|
45.00
|
|
|
$
|
50.71
|
|
|
$
|
54.00
|
|
|
$
|
50.00
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Swaps:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Barrels per day
|
48,000
|
|
|
29,000
(1)
|
|
|
7,000
(2)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Weighted-average price per barrel
|
$
|
60.35
|
|
|
$
|
60.50
|
|
|
$
|
67.71
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Note:
|
Additional hedges for 2019 were put in place after June 30, 2018 that are not included in the table above.
|
(1)
|
Certain of our counterparties have options to increase swap volumes by up to 19,000 barrels per day at a weighted-average Brent price of $60.13 for the fourth quarter of 2018.
|
(2)
|
Certain of our counterparties have options to increase swap volumes by up to 5,000 barrels per day at a weighted-average Brent price of $70.00 for the first quarter of 2019.
|
•
|
Sold calls – we make settlement payments for prices above the indicated weighted-average price per barrel.
|
•
|
Purchased calls – we receive settlement payments for prices above the indicated weighted-average price per barrel.
|
•
|
Purchased puts – we receive settlement payments for prices below the indicated weighted-average price per barrel.
|
•
|
Sold puts – we make settlement payments for prices below the indicated weighted-average price per barrel.
|
June 30, 2018
|
||||||||||||
Balance Sheet Classification
|
|
Gross Amounts Recognized at Fair Value
|
|
Gross Amounts Offset in the Balance Sheet
|
|
Net Fair Value Presented in the Balance Sheet
|
||||||
Assets:
|
|
|
|
|
|
|
||||||
Other current assets
|
|
$
|
59
|
|
|
$
|
—
|
|
|
$
|
59
|
|
Other assets
|
|
7
|
|
|
—
|
|
|
7
|
|
|||
|
|
|
|
|
|
|
||||||
Liabilities:
|
|
|
|
|
|
|
||||||
Accrued liabilities
|
|
(260
|
)
|
|
—
|
|
|
(260
|
)
|
|||
Other long-term liabilities
|
|
(6
|
)
|
|
—
|
|
|
(6
|
)
|
|||
Total derivatives
|
|
$
|
(200
|
)
|
|
$
|
—
|
|
|
$
|
(200
|
)
|
December 31, 2017
|
||||||||||||
Balance Sheet Classification
|
|
Gross Amounts Recognized at Fair Value
|
|
Gross Amounts Offset in the Balance Sheet
|
|
Net Fair Value Presented in the Balance Sheet
|
||||||
Assets:
|
|
|
|
|
|
|
||||||
Other current assets
|
|
$
|
39
|
|
|
$
|
(16
|
)
|
|
$
|
23
|
|
Other assets
|
|
1
|
|
|
—
|
|
|
1
|
|
|||
|
|
|
|
|
|
|
||||||
Liabilities:
|
|
|
|
|
|
|
||||||
Accrued liabilities
|
|
(170
|
)
|
|
16
|
|
|
(154
|
)
|
|||
Other long-term liabilities
|
|
(3
|
)
|
|
—
|
|
|
(3
|
)
|
|||
Total derivatives
|
|
$
|
(133
|
)
|
|
$
|
—
|
|
|
$
|
(133
|
)
|
|
Three months ended
June 30, |
|
Six months ended
June 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
(in millions, except per-share amounts)
|
||||||||||||||
Net (loss) income
|
$
|
(63
|
)
|
|
$
|
(47
|
)
|
|
$
|
(54
|
)
|
|
$
|
5
|
|
Net income attributable to noncontrolling interest
|
(19
|
)
|
|
(1
|
)
|
|
(30
|
)
|
|
—
|
|
||||
Net (loss) income attributable to common stock
|
(82
|
)
|
|
(48
|
)
|
|
(84
|
)
|
|
5
|
|
||||
Less: net income allocated to participating securities
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Net (loss) income available to common stockholders
|
$
|
(82
|
)
|
|
$
|
(48
|
)
|
|
$
|
(84
|
)
|
|
$
|
5
|
|
Weighted-average common shares outstanding - basic
|
48.2
|
|
|
42.4
|
|
|
46.3
|
|
|
42.4
|
|
||||
Basic EPS
|
$
|
(1.70
|
)
|
|
$
|
(1.13
|
)
|
|
$
|
(1.81
|
)
|
|
$
|
0.12
|
|
|
|
|
|
|
|
|
|
||||||||
Net (loss) income
|
$
|
(63
|
)
|
|
$
|
(47
|
)
|
|
$
|
(54
|
)
|
|
$
|
5
|
|
Net income attributable to noncontrolling interest
|
(19
|
)
|
|
(1
|
)
|
|
(30
|
)
|
|
—
|
|
||||
Net (loss) income attributable to common stock
|
(82
|
)
|
|
(48
|
)
|
|
(84
|
)
|
|
5
|
|
||||
Less: net income allocated to participating securities
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Net (loss) income available to common stockholders
|
$
|
(82
|
)
|
|
$
|
(48
|
)
|
|
$
|
(84
|
)
|
|
$
|
5
|
|
Weighted-average common shares outstanding - basic
|
48.2
|
|
|
42.4
|
|
|
46.3
|
|
|
42.4
|
|
||||
Dilutive effect of potentially dilutive securities
|
—
|
|
|
—
|
|
|
—
|
|
|
0.3
|
|
||||
Weighted-average common shares outstanding - diluted
|
48.2
|
|
|
42.4
|
|
|
46.3
|
|
|
42.7
|
|
||||
Diluted EPS
|
$
|
(1.70
|
)
|
|
$
|
(1.13
|
)
|
|
$
|
(1.81
|
)
|
|
$
|
0.12
|
|
Weighted-average anti-dilutive shares
|
3.0
|
|
|
2.7
|
|
|
2.9
|
|
|
1.8
|
|
|
Three months ended June 30,
|
||||||||||||||
|
2018
|
|
2017
|
||||||||||||
|
Pension
Benefit |
|
Postretirement
Benefit |
|
Pension
Benefit |
|
Postretirement
Benefit |
||||||||
|
(in millions)
|
||||||||||||||
Service cost
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
1
|
|
Interest cost
|
1
|
|
|
1
|
|
|
1
|
|
|
1
|
|
||||
Expected return on plan assets
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
||||
Recognized actuarial loss
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
||||
Settlement loss
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Total
|
$
|
2
|
|
|
$
|
2
|
|
|
$
|
1
|
|
|
$
|
2
|
|
|
Six months ended June 30,
|
||||||||||||||
|
2018
|
|
2017
|
||||||||||||
|
Pension
Benefit |
|
Postretirement
Benefit |
|
Pension
Benefit |
|
Postretirement
Benefit |
||||||||
|
(in millions)
|
||||||||||||||
Service cost
|
$
|
—
|
|
|
$
|
2
|
|
|
$
|
—
|
|
|
$
|
2
|
|
Interest cost
|
1
|
|
|
2
|
|
|
1
|
|
|
2
|
|
||||
Expected return on plan assets
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
||||
Recognized actuarial loss
|
1
|
|
|
—
|
|
|
1
|
|
|
—
|
|
||||
Settlement loss
|
4
|
|
|
—
|
|
|
3
|
|
|
—
|
|
||||
Total
|
$
|
5
|
|
|
$
|
4
|
|
|
$
|
4
|
|
|
$
|
4
|
|
|
Three months ended
June 30, 2018
|
|
Six months ended
June 30, 2018
|
||||
Oil and gas sales:
|
|
|
|
||||
Oil
|
$
|
553
|
|
|
$
|
1,019
|
|
NGLs
|
61
|
|
|
124
|
|
||
Natural gas
|
43
|
|
|
89
|
|
||
|
657
|
|
|
1,232
|
|
||
Other revenue:
|
|
|
|
||||
Electricity
|
21
|
|
|
45
|
|
||
Marketing
|
38
|
|
|
85
|
|
||
Interest income
|
—
|
|
|
1
|
|
||
|
59
|
|
|
131
|
|
||
Net derivative loss from commodity contracts
|
(167
|
)
|
|
(205
|
)
|
||
Total revenues and other
|
$
|
549
|
|
|
$
|
1,158
|
|
|
Three months ended
June 30, 2018
|
|
Six months ended
June 30, 2018
|
||||||||||||||||||||
|
As Reported
ASC 606
|
|
Previous
U.S. GAAP
|
|
Change
|
|
As Reported
ASC 606
|
|
Previous
U.S. GAAP
|
|
Change
|
||||||||||||
REVENUES AND OTHER
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Oil and gas sales
|
$
|
657
|
|
|
$
|
652
|
|
|
$
|
5
|
|
|
$
|
1,232
|
|
|
$
|
1,220
|
|
|
$
|
12
|
|
Net derivative loss from commodity contracts
|
(167
|
)
|
|
(167
|
)
|
|
—
|
|
|
(205
|
)
|
|
(205
|
)
|
|
—
|
|
||||||
Other revenue
|
59
|
|
|
28
|
|
|
31
|
|
|
131
|
|
|
65
|
|
|
66
|
|
||||||
Total revenues and other
|
549
|
|
|
513
|
|
|
36
|
|
|
1,158
|
|
|
1,080
|
|
|
78
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
COSTS AND OTHER
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Production costs
|
231
|
|
|
231
|
|
|
—
|
|
|
443
|
|
|
443
|
|
|
—
|
|
||||||
General and administrative expenses
|
90
|
|
|
90
|
|
|
—
|
|
|
153
|
|
|
153
|
|
|
—
|
|
||||||
Depreciation, depletion and amortization
|
125
|
|
|
125
|
|
|
—
|
|
|
244
|
|
|
244
|
|
|
—
|
|
||||||
Taxes other than on income
|
37
|
|
|
37
|
|
|
—
|
|
|
75
|
|
|
75
|
|
|
—
|
|
||||||
Exploration expenses
|
6
|
|
|
6
|
|
|
—
|
|
|
14
|
|
|
14
|
|
|
—
|
|
||||||
Other expenses, net
|
49
|
|
|
13
|
|
|
36
|
|
|
110
|
|
|
32
|
|
|
78
|
|
||||||
Total costs and other
|
538
|
|
|
502
|
|
|
36
|
|
|
1,039
|
|
|
961
|
|
|
78
|
|
||||||
OPERATING INCOME
|
11
|
|
|
11
|
|
|
—
|
|
|
119
|
|
|
119
|
|
|
—
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
NON-OPERATING (LOSS) INCOME
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Interest and debt expense, net
|
(94
|
)
|
|
(94
|
)
|
|
—
|
|
|
(186
|
)
|
|
(186
|
)
|
|
—
|
|
||||||
Net gain on early extinguishment of debt
|
24
|
|
|
24
|
|
|
—
|
|
|
24
|
|
|
24
|
|
|
—
|
|
||||||
Gain on asset divestitures
|
1
|
|
|
1
|
|
|
—
|
|
|
1
|
|
|
1
|
|
|
—
|
|
||||||
Other non-operating expenses
|
(5
|
)
|
|
(5
|
)
|
|
—
|
|
|
(12
|
)
|
|
(12
|
)
|
|
—
|
|
||||||
LOSS BEFORE INCOME TAXES
|
(63
|
)
|
|
(63
|
)
|
|
—
|
|
|
(54
|
)
|
|
(54
|
)
|
|
—
|
|
||||||
Income tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
NET LOSS
|
(63
|
)
|
|
(63
|
)
|
|
—
|
|
|
(54
|
)
|
|
(54
|
)
|
|
—
|
|
||||||
Net income attributable to noncontrolling interests
|
(19
|
)
|
|
(19
|
)
|
|
—
|
|
|
(30
|
)
|
|
(30
|
)
|
|
—
|
|
||||||
NET LOSS ATTRIBUTABLE TO COMMON STOCK
|
$
|
(82
|
)
|
|
$
|
(82
|
)
|
|
$
|
—
|
|
|
$
|
(84
|
)
|
|
$
|
(84
|
)
|
|
$
|
—
|
|
Condensed Consolidating Balance Sheets
|
|||||||||||||||||||
|
Parent
|
|
Combined Guarantor Subsidiaries
|
|
Combined Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
As of June 30, 2018
|
(in millions)
|
||||||||||||||||||
Total current assets
|
$
|
14
|
|
|
$
|
468
|
|
|
$
|
85
|
|
|
$
|
(8
|
)
|
|
$
|
559
|
|
Total property, plant and equipment, net
|
22
|
|
|
5,761
|
|
|
551
|
|
|
—
|
|
|
6,334
|
|
|||||
Investments in consolidated subsidiaries
|
5,625
|
|
|
141
|
|
|
—
|
|
|
(5,766
|
)
|
|
—
|
|
|||||
Other assets
|
9
|
|
|
24
|
|
|
14
|
|
|
—
|
|
|
47
|
|
|||||
TOTAL ASSETS
|
$
|
5,670
|
|
|
$
|
6,394
|
|
|
$
|
650
|
|
|
$
|
(5,774
|
)
|
|
$
|
6,940
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Total current liabilities
|
102
|
|
|
788
|
|
|
11
|
|
|
(8
|
)
|
|
893
|
|
|||||
Long-term debt
|
5,075
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,075
|
|
|||||
Deferred gain and issuance costs, net
|
265
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
265
|
|
|||||
Other long-term liabilities
|
155
|
|
|
454
|
|
|
8
|
|
|
—
|
|
|
617
|
|
|||||
Amounts due to (from) affiliates
|
862
|
|
|
(862
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Mezzanine equity
|
—
|
|
|
—
|
|
|
735
|
|
|
—
|
|
|
735
|
|
|||||
Total equity
|
(789
|
)
|
|
6,014
|
|
|
(104
|
)
|
|
(5,766
|
)
|
|
(645
|
)
|
|||||
TOTAL LIABILITIES AND EQUITY
|
$
|
5,670
|
|
|
$
|
6,394
|
|
|
$
|
650
|
|
|
$
|
(5,774
|
)
|
|
$
|
6,940
|
|
As of December 31, 2017
|
|
||||||||||||||||||
Total current assets
|
$
|
13
|
|
|
$
|
464
|
|
|
$
|
12
|
|
|
$
|
(6
|
)
|
|
$
|
483
|
|
Total property, plant and equipment, net
|
24
|
|
|
5,580
|
|
|
92
|
|
|
—
|
|
|
5,696
|
|
|||||
Investments in consolidated subsidiaries
|
5,105
|
|
|
606
|
|
|
—
|
|
|
(5,711
|
)
|
|
—
|
|
|||||
Other assets
|
—
|
|
|
27
|
|
|
1
|
|
|
—
|
|
|
28
|
|
|||||
TOTAL ASSETS
|
$
|
5,142
|
|
|
$
|
6,677
|
|
|
$
|
105
|
|
|
$
|
(5,717
|
)
|
|
$
|
6,207
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Total current liabilities
|
122
|
|
|
613
|
|
|
3
|
|
|
(6
|
)
|
|
732
|
|
|||||
Long-term debt
|
5,306
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,306
|
|
|||||
Deferred gain and issuance costs, net
|
287
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
287
|
|
|||||
Other long-term liabilities
|
154
|
|
|
445
|
|
|
3
|
|
|
—
|
|
|
602
|
|
|||||
Amounts due to (from) affiliates
|
87
|
|
|
(87
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Total equity
|
(814
|
)
|
|
5,706
|
|
|
99
|
|
|
(5,711
|
)
|
|
(720
|
)
|
|||||
TOTAL LIABILITIES AND EQUITY
|
$
|
5,142
|
|
|
$
|
6,677
|
|
|
$
|
105
|
|
|
$
|
(5,717
|
)
|
|
$
|
6,207
|
|
Condensed Consolidating Statements of Operations
|
|||||||||||||||||||
|
Parent
|
|
Combined Guarantor Subsidiaries
|
|
Combined Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
For the three months ended June 30, 2018
|
(in millions)
|
||||||||||||||||||
Total revenues and other
|
$
|
—
|
|
|
$
|
526
|
|
|
$
|
94
|
|
|
$
|
(71
|
)
|
|
$
|
549
|
|
Total costs and other
|
64
|
|
|
499
|
|
|
46
|
|
|
(71
|
)
|
|
538
|
|
|||||
Non-operating loss
|
(74
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(74
|
)
|
|||||
NET (LOSS) INCOME
|
(138
|
)
|
|
27
|
|
|
48
|
|
|
—
|
|
|
(63
|
)
|
|||||
Net income attributable to noncontrolling interests
|
—
|
|
|
—
|
|
|
(19
|
)
|
|
—
|
|
|
(19
|
)
|
|||||
NET (LOSS) INCOME ATTRIBUTABLE TO COMMON STOCK
|
$
|
(138
|
)
|
|
$
|
27
|
|
|
$
|
29
|
|
|
$
|
—
|
|
|
$
|
(82
|
)
|
For the three months ended June 30, 2017
|
|
|
|
|
|
|
|
|
|
||||||||||
Total revenues and other
|
$
|
18
|
|
|
$
|
515
|
|
|
$
|
4
|
|
|
$
|
(21
|
)
|
|
$
|
516
|
|
Total costs and other
|
54
|
|
|
439
|
|
|
3
|
|
|
(21
|
)
|
|
475
|
|
|||||
Non-operating (loss) income
|
(88
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(88
|
)
|
|||||
NET (LOSS) INCOME
|
(124
|
)
|
|
76
|
|
|
1
|
|
|
—
|
|
|
(47
|
)
|
|||||
Net loss attributable to noncontrolling interest
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
|||||
NET (LOSS) INCOME ATTRIBUTABLE TO COMMON STOCK
|
$
|
(124
|
)
|
|
$
|
76
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(48
|
)
|
Condensed Consolidating Statements of Operations
|
|||||||||||||||||||
|
Parent
|
|
Combined Guarantor Subsidiaries
|
|
Combined Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
For the six months ended June 30, 2018
|
(in millions)
|
||||||||||||||||||
Total revenues and other
|
$
|
1
|
|
|
$
|
1,111
|
|
|
$
|
159
|
|
|
$
|
(113
|
)
|
|
$
|
1,158
|
|
Total costs and other
|
107
|
|
|
960
|
|
|
85
|
|
|
(113
|
)
|
|
1,039
|
|
|||||
Non-operating loss
|
(173
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(173
|
)
|
|||||
NET (LOSS) INCOME
|
(279
|
)
|
|
151
|
|
|
74
|
|
|
—
|
|
|
(54
|
)
|
|||||
Net income attributable to noncontrolling interests
|
—
|
|
|
—
|
|
|
(30
|
)
|
|
—
|
|
|
(30
|
)
|
|||||
NET (LOSS) INCOME ATTRIBUTABLE TO COMMON STOCK
|
$
|
(279
|
)
|
|
$
|
151
|
|
|
$
|
44
|
|
|
$
|
—
|
|
|
$
|
(84
|
)
|
For the six months ended June 30, 2017
|
|
|
|
|
|
|
|
|
|
||||||||||
Total revenues and other
|
$
|
17
|
|
|
$
|
1,105
|
|
|
$
|
5
|
|
|
$
|
(21
|
)
|
|
$
|
1,106
|
|
Total costs and other
|
107
|
|
|
859
|
|
|
5
|
|
|
(21
|
)
|
|
950
|
|
|||||
Non-operating (loss) income
|
(169
|
)
|
|
18
|
|
|
—
|
|
|
—
|
|
|
(151
|
)
|
|||||
NET (LOSS) INCOME
|
(259
|
)
|
|
264
|
|
|
—
|
|
|
—
|
|
|
5
|
|
|||||
Net loss attributable to noncontrolling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
NET (LOSS) INCOME ATTRIBUTABLE TO COMMON STOCK
|
$
|
(259
|
)
|
|
$
|
264
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5
|
|
Condensed Consolidating Statements of Cash Flows
|
|||||||||||||||||||
|
Parent
|
|
Combined Guarantor Subsidiaries
|
|
Combined Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
For the six months ended June 30, 2018
|
(in millions)
|
||||||||||||||||||
Net cash (used) provided by operating activities
|
$
|
(334
|
)
|
|
$
|
480
|
|
|
$
|
88
|
|
|
$
|
—
|
|
|
$
|
234
|
|
Net cash used in investing activities
|
(1
|
)
|
|
(776
|
)
|
|
(30
|
)
|
|
—
|
|
|
(807
|
)
|
|||||
Net cash provided (used) by financing activities
|
334
|
|
|
293
|
|
|
(32
|
)
|
|
—
|
|
|
595
|
|
|||||
(Decrease) increase in cash
|
(1
|
)
|
|
(3
|
)
|
|
26
|
|
|
—
|
|
|
22
|
|
|||||
Cash—beginning of period
|
7
|
|
|
8
|
|
|
5
|
|
|
—
|
|
|
20
|
|
|||||
Cash—end of period
|
$
|
6
|
|
|
$
|
5
|
|
|
$
|
31
|
|
|
$
|
—
|
|
|
$
|
42
|
|
For the six months ended June 30, 2017
|
|
|
|
|
|
|
|
|
|
||||||||||
Net cash (used) provided by operating activities
|
$
|
(319
|
)
|
|
$
|
437
|
|
|
$
|
2
|
|
|
$
|
—
|
|
|
$
|
120
|
|
Net cash used in investing activities
|
(1
|
)
|
|
(26
|
)
|
|
(47
|
)
|
|
—
|
|
|
(74
|
)
|
|||||
Net cash provided (used) by financing activities
|
321
|
|
|
(417
|
)
|
|
47
|
|
|
—
|
|
|
(49
|
)
|
|||||
Increase (decrease) in cash
|
1
|
|
|
(6
|
)
|
|
2
|
|
|
—
|
|
|
(3
|
)
|
|||||
Cash—beginning of period
|
—
|
|
|
12
|
|
|
—
|
|
|
—
|
|
|
12
|
|
|||||
Cash—end of period
|
$
|
1
|
|
|
$
|
6
|
|
|
$
|
2
|
|
|
$
|
—
|
|
|
$
|
9
|
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
|
Three months ended
June 30, |
|
Six months ended
June 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Brent oil ($/Bbl)
|
$
|
74.90
|
|
|
$
|
50.92
|
|
|
$
|
71.04
|
|
|
$
|
52.79
|
|
WTI oil ($/Bbl)
|
$
|
67.88
|
|
|
$
|
48.29
|
|
|
$
|
65.37
|
|
|
$
|
50.10
|
|
NYMEX gas ($/MMBtu)
|
$
|
2.75
|
|
|
$
|
3.14
|
|
|
$
|
2.81
|
|
|
$
|
3.20
|
|
|
Three months ended
June 30, |
|
Six months ended
June 30, |
||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||
Oil (MBbl/d)
|
|
|
|
|
|
|
|
||||
San Joaquin Basin
|
54
|
|
|
52
|
|
|
52
|
|
|
52
|
|
Los Angeles Basin
|
25
|
|
|
26
|
|
|
24
|
|
|
27
|
|
Ventura Basin
|
4
|
|
|
5
|
|
|
4
|
|
|
5
|
|
Sacramento Basin
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Total
|
83
|
|
|
83
|
|
|
80
|
|
|
84
|
|
NGLs (MBbl/d)
|
|
|
|
|
|
|
|
||||
San Joaquin Basin
|
15
|
|
|
15
|
|
|
15
|
|
|
15
|
|
Los Angeles Basin
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Ventura Basin
|
1
|
|
|
1
|
|
|
1
|
|
|
1
|
|
Sacramento Basin
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Total
|
16
|
|
|
16
|
|
|
16
|
|
|
16
|
|
Natural gas (MMcf/d)
|
|
|
|
|
|
|
|
||||
San Joaquin Basin
|
172
|
|
|
141
|
|
|
157
|
|
|
141
|
|
Los Angeles Basin
|
1
|
|
|
—
|
|
|
1
|
|
|
1
|
|
Ventura Basin
|
8
|
|
|
8
|
|
|
7
|
|
|
8
|
|
Sacramento Basin
|
29
|
|
|
33
|
|
|
31
|
|
|
33
|
|
Total
|
210
|
|
|
182
|
|
|
196
|
|
|
183
|
|
|
|
|
|
|
|
|
|
||||
Total Production (MBoe/d)
(a)
|
134
|
|
|
129
|
|
|
129
|
|
|
131
|
|
Note:
|
MBbl/d refers to thousands of barrels per day; MMcf/d refers to millions of cubic feet per day; MBoe/d refers to thousands of barrels of oil equivalent per day.
|
(a)
|
Natural gas volumes have been converted to Boe based on the equivalence of energy content between six Mcf of natural gas and one barrel of oil. Barrels of oil equivalence does not necessarily result in price equivalence.
|
|
Three months ended
June 30, |
|
Six months ended
June 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Oil prices with hedge ($ per Bbl)
|
$
|
64.11
|
|
|
$
|
47.98
|
|
|
$
|
63.47
|
|
|
$
|
49.12
|
|
|
|
|
|
|
|
|
|
||||||||
Oil prices without hedge ($ per Bbl)
|
$
|
73.19
|
|
|
$
|
46.95
|
|
|
$
|
70.35
|
|
|
$
|
48.70
|
|
NGLs prices ($ per Bbl)
|
$
|
42.13
|
|
|
$
|
30.08
|
|
|
$
|
42.63
|
|
|
$
|
32.20
|
|
Natural gas prices ($ per Mcf)
(a)
|
$
|
2.25
|
|
|
$
|
2.47
|
|
|
$
|
2.51
|
|
|
$
|
2.68
|
|
(a)
|
For the three and six months ended June 30, 2018, the realized gas price was impacted by the adoption of new accounting rules on revenue recognition and would have been $2.06 and $2.28 per Mcf, respectively, under prior accounting standards.
|
|
Three months ended
June 30, |
|
Six months ended
June 30, |
||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||
Oil with hedge as a percentage of Brent
|
86
|
%
|
|
94
|
%
|
|
89
|
%
|
|
93
|
%
|
Oil with hedge as a percentage of WTI
|
94
|
%
|
|
99
|
%
|
|
97
|
%
|
|
98
|
%
|
|
|
|
|
|
|
|
|
||||
Oil without hedge as a percentage of Brent
|
98
|
%
|
|
92
|
%
|
|
99
|
%
|
|
92
|
%
|
Oil without hedge as a percentage of WTI
|
108
|
%
|
|
97
|
%
|
|
108
|
%
|
|
97
|
%
|
NGLs as a percentage of Brent
|
56
|
%
|
|
59
|
%
|
|
60
|
%
|
|
61
|
%
|
NGLs as a percentage of WTI
|
62
|
%
|
|
62
|
%
|
|
65
|
%
|
|
64
|
%
|
Natural gas as a percentage of NYMEX
(a)
|
82
|
%
|
|
79
|
%
|
|
89
|
%
|
|
84
|
%
|
(a)
|
For the three and six months ended June 30, 2018, the gas price realization as a percentage of NYMEX was impacted by the adoption of new accounting rules on revenue recognition and would have been 75% and 81%, respectively, under prior accounting standards.
|
|
June 30, 2018
|
|
December 31, 2017
|
||||
|
(in millions)
|
||||||
Cash
|
$
|
42
|
|
|
$
|
20
|
|
Trade receivables
|
$
|
282
|
|
|
$
|
277
|
|
Inventories
|
$
|
63
|
|
|
$
|
56
|
|
Other current assets, net
|
$
|
172
|
|
|
$
|
130
|
|
Property, plant and equipment, net
|
$
|
6,334
|
|
|
$
|
5,696
|
|
Other assets
|
$
|
47
|
|
|
$
|
28
|
|
Accounts payable
|
$
|
330
|
|
|
$
|
257
|
|
Accrued liabilities
|
$
|
563
|
|
|
$
|
475
|
|
Long-term debt
|
$
|
5,075
|
|
|
$
|
5,306
|
|
Deferred gain and issuance costs, net
|
$
|
265
|
|
|
$
|
287
|
|
Other long-term liabilities
|
$
|
617
|
|
|
$
|
602
|
|
Mezzanine equity
|
$
|
735
|
|
|
$
|
—
|
|
Equity attributable to common stock
|
$
|
(789
|
)
|
|
$
|
(814
|
)
|
Equity attributable to noncontrolling interests
|
$
|
144
|
|
|
$
|
94
|
|
|
Three months ended
June 30, |
|
Six months ended
June 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Production costs
|
$
|
18.93
|
|
|
$
|
18.34
|
|
|
$
|
19.01
|
|
|
$
|
18.02
|
|
Production costs, excluding effects of PSC-type contracts
(a)
|
$
|
17.41
|
|
|
$
|
17.18
|
|
|
$
|
17.44
|
|
|
$
|
16.92
|
|
Field general and administrative expenses
(b)
|
$
|
1.07
|
|
|
$
|
0.76
|
|
|
$
|
0.90
|
|
|
$
|
0.76
|
|
Field depreciation, depletion and amortization
(b)
|
$
|
9.18
|
|
|
$
|
10.95
|
|
|
$
|
9.40
|
|
|
$
|
11.01
|
|
Field taxes other than on income
(b)
|
$
|
2.38
|
|
|
$
|
2.12
|
|
|
$
|
2.53
|
|
|
$
|
2.19
|
|
(a)
|
As described in the
Operations
section, the reporting of our PSC-type contracts creates a difference between reported production costs, which are for the full field, and reported volumes, which are only our net share, inflating the per barrel production costs. These amounts represent the production costs for the company after adjusting for this difference.
|
(b)
|
Excludes corporate amounts.
|
|
Three months ended
June 30, |
|
Six months ended
June 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
(in millions)
|
||||||||||||||
Oil and gas sales
(a)
|
$
|
657
|
|
|
$
|
439
|
|
|
$
|
1,232
|
|
|
$
|
926
|
|
Net derivative (loss) gain
|
(167
|
)
|
|
43
|
|
|
(205
|
)
|
|
116
|
|
||||
Other revenue
(a)
|
59
|
|
|
34
|
|
|
131
|
|
|
64
|
|
||||
Production costs
|
(231
|
)
|
|
(216
|
)
|
|
(443
|
)
|
|
(427
|
)
|
||||
General and administrative expenses
(b)
|
(90
|
)
|
|
(59
|
)
|
|
(153
|
)
|
|
(122
|
)
|
||||
Depreciation, depletion and amortization
|
(125
|
)
|
|
(138
|
)
|
|
(244
|
)
|
|
(278
|
)
|
||||
Taxes other than on income
|
(37
|
)
|
|
(31
|
)
|
|
(75
|
)
|
|
(64
|
)
|
||||
Exploration expense
|
(6
|
)
|
|
(6
|
)
|
|
(14
|
)
|
|
(12
|
)
|
||||
Other expenses, net
(a)
|
(49
|
)
|
|
(25
|
)
|
|
(110
|
)
|
|
(47
|
)
|
||||
Interest and debt expense, net
|
(94
|
)
|
|
(83
|
)
|
|
(186
|
)
|
|
(167
|
)
|
||||
Net gain on early extinguishment of debt
|
24
|
|
|
—
|
|
|
24
|
|
|
4
|
|
||||
Gain on asset divestitures
|
1
|
|
|
—
|
|
|
1
|
|
|
21
|
|
||||
Other non-operating expenses
(b)
|
(5
|
)
|
|
(5
|
)
|
|
(12
|
)
|
|
(9
|
)
|
||||
(Loss) income before income taxes
|
(63
|
)
|
|
(47
|
)
|
|
(54
|
)
|
|
5
|
|
||||
Income tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Net (loss) income
|
(63
|
)
|
|
(47
|
)
|
|
(54
|
)
|
|
5
|
|
||||
Net income attributable to noncontrolling interests
|
(19
|
)
|
|
(1
|
)
|
|
(30
|
)
|
|
—
|
|
||||
Net (loss) income attributable to common stock
|
$
|
(82
|
)
|
|
$
|
(48
|
)
|
|
$
|
(84
|
)
|
|
$
|
5
|
|
|
|
|
|
|
|
|
|
||||||||
Adjusted net loss
|
$
|
(14
|
)
|
|
$
|
(78
|
)
|
|
$
|
(6
|
)
|
|
$
|
(121
|
)
|
Adjusted EBITDAX
|
$
|
245
|
|
|
$
|
161
|
|
|
$
|
495
|
|
|
$
|
361
|
|
Effective tax rate
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
(a)
|
We adopted the new revenue recognition standard on January 1, 2018 which required certain sales-related costs to be reported as expense as opposed to being netted against revenue. The adoption of this standard does not affect net income. Results for reporting periods beginning after January 1, 2018 are presented under the new accounting standard while prior periods are not adjusted and continue to be reported under accounting standards in effect for the prior period. Under prior accounting standards, for the three and six months ended June 30, 2018, total oil and gas sales would have been
$652 million
and
$1,220 million
, respectively, other revenue would have been
$28 million
and
$65 million
, respectively, and other expenses, net would have been
$13 million
and
$32 million
, respectively. See
Note 12 Revenue Recognition
in the Notes to the Condensed Consolidated Financial Statements included in Part I of this Form 10-Q for more information.
|
(b)
|
For the three and six months ended June 30, 2017, certain pension benefit costs of $2 million and $6 million, respectively, have been reclassified to other non-operating expenses to conform to the current year presentation in accordance with new accounting rules adopted on January 1, 2018 related to the presentation of net periodic benefit costs for pension and postretirement benefits in the Statements of Operations. See
Note 2 Accounting and Disclosure Changes
in the Notes to the Condensed Consolidated Financial Statements included in Part I of this Form 10-Q for more information.
|
|
Three months ended
June 30, |
|
Six months ended
June 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
(in millions)
|
||||||||||||||
General and administrative expenses
|
|
|
|
|
|
|
|
||||||||
Cash-settled awards
|
$
|
19
|
|
|
$
|
—
|
|
|
$
|
22
|
|
|
$
|
1
|
|
Equity-settled awards
|
4
|
|
|
4
|
|
|
7
|
|
|
7
|
|
||||
Total stock-based compensation in G&A
|
$
|
23
|
|
|
$
|
4
|
|
|
$
|
29
|
|
|
$
|
8
|
|
Total stock-based compensation in G&A per Boe
|
$
|
1.89
|
|
|
$
|
0.34
|
|
|
$
|
1.24
|
|
|
$
|
0.34
|
|
|
|
|
|
|
|
|
|
||||||||
Production costs
|
|
|
|
|
|
|
|
||||||||
Cash-settled awards
|
$
|
5
|
|
|
$
|
—
|
|
|
$
|
6
|
|
|
$
|
—
|
|
Equity-settled awards
|
1
|
|
|
1
|
|
|
2
|
|
|
2
|
|
||||
Total stock-based compensation in production costs
|
$
|
6
|
|
|
$
|
1
|
|
|
$
|
8
|
|
|
$
|
2
|
|
Total stock-based compensation in production costs per Boe
|
$
|
0.49
|
|
|
$
|
0.08
|
|
|
$
|
0.34
|
|
|
$
|
0.08
|
|
|
|
|
|
|
|
|
|
||||||||
Total company stock-based compensation
|
$
|
29
|
|
|
$
|
5
|
|
|
$
|
37
|
|
|
$
|
10
|
|
Total company stock-based compensation per Boe
|
$
|
2.38
|
|
|
$
|
0.42
|
|
|
$
|
1.58
|
|
|
$
|
0.42
|
|
|
Three months ended
June 30, |
|
Six months ended
June 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
(in millions)
|
||||||||||||||
Net (loss) income attributable to common stock
|
$
|
(82
|
)
|
|
$
|
(48
|
)
|
|
$
|
(84
|
)
|
|
$
|
5
|
|
Unusual, infrequent and other items:
|
|
|
|
|
|
|
|
||||||||
Non-cash derivative loss (gain), excluding noncontrolling interest
|
92
|
|
|
(35
|
)
|
|
99
|
|
|
(110
|
)
|
||||
Early retirement and severance costs
|
2
|
|
|
—
|
|
|
4
|
|
|
3
|
|
||||
Net gain on early extinguishment of debt
|
(24
|
)
|
|
—
|
|
|
(24
|
)
|
|
(4
|
)
|
||||
Gain on asset divestitures
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
|
(21
|
)
|
||||
Other, net
|
(1
|
)
|
|
5
|
|
|
—
|
|
|
6
|
|
||||
Total unusual, infrequent and other items
|
68
|
|
|
(30
|
)
|
|
78
|
|
|
(126
|
)
|
||||
Adjusted net loss
|
$
|
(14
|
)
|
|
$
|
(78
|
)
|
|
$
|
(6
|
)
|
|
$
|
(121
|
)
|
|
|
|
|
|
|
|
|
||||||||
Net (loss) income attributable to common stock per diluted share
|
$
|
(1.70
|
)
|
|
$
|
(1.13
|
)
|
|
$
|
(1.81
|
)
|
|
$
|
0.12
|
|
Adjusted net loss per diluted share
|
$
|
(0.29
|
)
|
|
$
|
(1.83
|
)
|
|
$
|
(0.13
|
)
|
|
$
|
(2.85
|
)
|
|
Three months ended
June 30, |
|
Six months ended
June 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
(in millions)
|
||||||||||||||
Net (loss) income
|
$
|
(63
|
)
|
|
$
|
(47
|
)
|
|
$
|
(54
|
)
|
|
$
|
5
|
|
Interest and debt expense, net
|
94
|
|
|
83
|
|
|
186
|
|
|
167
|
|
||||
Interest income
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
||||
Depreciation, depletion and amortization
|
125
|
|
|
138
|
|
|
244
|
|
|
278
|
|
||||
Exploration expense
|
6
|
|
|
6
|
|
|
14
|
|
|
12
|
|
||||
Unusual, infrequent and other items
|
68
|
|
|
(30
|
)
|
|
78
|
|
|
(126
|
)
|
||||
Other non-cash items
|
16
|
|
|
11
|
|
|
28
|
|
|
25
|
|
||||
Adjusted EBITDAX
|
$
|
245
|
|
|
$
|
161
|
|
|
$
|
495
|
|
|
$
|
361
|
|
|
Six months ended
June 30, |
||||||
|
2018
|
|
2017
|
||||
|
(in millions)
|
||||||
Net cash provided by operating activities
|
$
|
234
|
|
|
$
|
120
|
|
Cash interest
|
215
|
|
|
195
|
|
||
Exploration expenditures
|
10
|
|
|
11
|
|
||
Changes in operating assets and liabilities
|
37
|
|
|
29
|
|
||
Other, net
|
(1
|
)
|
|
6
|
|
||
Adjusted EBITDAX
|
$
|
495
|
|
|
$
|
361
|
|
|
Three months ended
June 30, |
|
Six months ended
June 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
(in millions)
|
||||||||||||||
Non-cash derivative (loss) gain, excluding noncontrolling interest
|
$
|
(92
|
)
|
|
$
|
35
|
|
|
$
|
(99
|
)
|
|
$
|
110
|
|
Non-cash derivative loss included in noncontrolling interest
|
(7
|
)
|
|
—
|
|
|
(7
|
)
|
|
(1
|
)
|
||||
Net (payments) proceeds on settled commodity derivatives
|
(68
|
)
|
|
8
|
|
|
(99
|
)
|
|
7
|
|
||||
Net derivative (loss) gain from commodity contracts
|
$
|
(167
|
)
|
|
$
|
43
|
|
|
$
|
(205
|
)
|
|
$
|
116
|
|
|
Six months ended
June 30, |
||||||
|
2018
|
|
2017
|
||||
|
(in millions)
|
||||||
Net cash provided by operating activities
|
$
|
234
|
|
|
$
|
120
|
|
Net cash used in investing activities:
|
|
|
|
||||
Capital investments, net of accruals
|
$
|
(305
|
)
|
|
$
|
(106
|
)
|
Acquisitions, divestitures and other
|
$
|
(502
|
)
|
|
$
|
32
|
|
Net cash provided (used) by financing activities
|
$
|
595
|
|
|
$
|
(49
|
)
|
Adjusted EBITDAX
|
$
|
495
|
|
|
$
|
361
|
|
|
Outstanding Principal
(in millions)
|
|
Interest Rate
|
|
Maturity
|
|
Security
|
||
Credit Agreements
|
|
|
|
|
|
|
|
||
2014 Revolving Credit Facility
|
$
|
277
|
|
|
LIBOR plus 3.25%-4.00%
ABR plus 2.25%-3.00% |
|
June 30, 2021
|
|
Shared First-Priority Lien
|
2017 Credit Agreement
|
1,300
|
|
|
LIBOR plus 4.75%
ABR plus 3.75% |
|
December 31, 2022
(a)
|
|
Shared First-Priority Lien
|
|
2016 Credit Agreement
|
1,000
|
|
|
LIBOR plus 10.375%
ABR plus 9.375% |
|
December 31, 2021
|
|
First-Priority Lien
|
|
Second Lien Notes
|
|
|
|
|
|
|
|
||
Second Lien Notes
|
2,153
|
|
|
8%
|
|
December 15, 2022
(b)
|
|
Second-Priority Lien
|
|
Senior Notes
|
|
|
|
|
|
|
|
||
5% Senior Notes due 2020
|
100
|
|
|
5%
|
|
January 15, 2020
|
|
Unsecured
|
|
5½% Senior Notes due 2021
|
100
|
|
|
5.5%
|
|
September 15, 2021
|
|
Unsecured
|
|
6% Senior Notes due 2024
|
145
|
|
|
6%
|
|
November 15, 2024
|
|
Unsecured
|
|
Total
|
$
|
5,075
|
|
|
|
|
|
|
|
(a)
|
The 2017 Credit Agreement is subject to a springing maturity of 91 days prior to the maturity of our 2016 Credit Agreement if more than $100 million on the 2017 Credit Agreement is outstanding at that time.
|
(b)
|
The Second Lien Notes require principal repayments of approximately $340 million in June 2021 and $70 million each in December 2021 and June 2022.
|
|
Q3
2018
|
|
Q4
2018
|
|
Q1
2019
|
|
Q2
2019
|
|
Q3
2019 |
|
Q4
2019 |
|
FY
2020
|
|
FY
2021
|
||||||||||||||||
Sold Calls:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Barrels per day
|
6,127
|
|
|
16,086
|
|
|
16,057
|
|
|
6,023
|
|
|
991
|
|
|
961
|
|
|
503
|
|
|
—
|
|
||||||||
Weighted-average price per barrel
|
$
|
60.24
|
|
|
$
|
58.91
|
|
|
$
|
65.75
|
|
|
$
|
67.01
|
|
|
$
|
60.00
|
|
|
$
|
60.00
|
|
|
$
|
60.00
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Purchased Calls:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Barrels per day
|
—
|
|
|
—
|
|
|
2,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Weighted-average price per barrel
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
71.00
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Purchased Puts:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Barrels per day
|
6,922
|
|
|
1,851
|
|
|
34,793
|
|
|
36,733
|
|
|
31,676
|
|
|
21,623
|
|
|
1,506
|
|
|
574
|
|
||||||||
Weighted-average price per barrel
|
$
|
61.31
|
|
|
$
|
51.70
|
|
|
$
|
62.77
|
|
|
$
|
67.40
|
|
|
$
|
70.50
|
|
|
$
|
73.09
|
|
|
$
|
47.97
|
|
|
$
|
45.00
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Sold Puts:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Barrels per day
|
24,000
|
|
|
19,000
|
|
|
35,000
|
|
|
30,000
|
|
|
30,000
|
|
|
20,000
|
|
|
—
|
|
|
—
|
|
||||||||
Weighted-average price per barrel
|
$
|
46.04
|
|
|
$
|
45.00
|
|
|
$
|
50.71
|
|
|
$
|
55.00
|
|
|
$
|
56.67
|
|
|
$
|
60.00
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Swaps:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Barrels per day
|
48,000
|
|
|
29,000
(1)
|
|
|
7,000
(2)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Weighted-average price per barrel
|
$
|
60.35
|
|
|
$
|
60.50
|
|
|
$
|
67.71
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
(1)
|
Certain of our counterparties have options to increase swap volumes by up to 19,000 barrels per day at a weighted-average Brent price of $60.13 for the fourth quarter of 2018.
|
(2)
|
Certain of our counterparties have options to increase swap volumes by up to 5,000 barrels per day at a weighted-average Brent price of $70.00 for the first quarter of 2019.
|
Drilling
|
$
|
315
|
|
47
|
%
|
Development facilities
|
140
|
|
21
|
%
|
|
Capital workovers
|
90
|
|
13
|
%
|
|
Exploration
|
20
|
|
3
|
%
|
|
Corporate and other
|
10
|
|
1
|
%
|
|
Total internally funded capital
|
575
|
|
|
||
Joint venture capital
|
100
|
|
15
|
%
|
|
Total capital
|
$
|
675
|
|
|
Item 3.
|
Quantitative and Qualitative Disclosures About Market Risk
|
Item 4.
|
Controls and Procedures
|
Item 1.
|
Legal Proceedings
|
Item 1.A.
|
Risk Factors
|
Item 5.
|
Other Disclosures
|
Item 6.
|
Exhibits
|
4.1*
|
|
|
|
4.2*
|
|
|
|
4.3
|
|
|
|
12*
|
|
|
|
31.1*
|
|
|
|
31.2*
|
|
|
|
32.1*
|
|
|
|
101.INS*
|
XBRL Instance Document.
|
|
|
101.SCH*
|
XBRL Taxonomy Extension Schema Document.
|
|
|
101.CAL*
|
XBRL Taxonomy Extension Calculation Linkbase Document.
|
|
|
101.LAB*
|
XBRL Taxonomy Extension Label Linkbase Document.
|
|
|
101.PRE*
|
XBRL Taxonomy Extension Presentation Linkbase Document.
|
|
|
101.DEF*
|
XBRL Taxonomy Extension Definition Linkbase Document.
|
|
CALIFORNIA RESOURCES CORPORATION
|
|
DATE:
|
August 2, 2018
|
/s/ Roy Pineci
|
|
|
|
Roy Pineci
|
|
|
|
Executive Vice President - Finance
|
|
|
|
(Principal Accounting Officer)
|
|
|
CALIFORNIA RESOURCES CORPORATION
|
|
|
|
|
|
|
|
By:
|
/s/ Marshall D. Smith
|
|
|
Name:
|
Marshall D. Smith
|
|
|
Title:
|
Senior Executive Vice President and Chief Financial Officer
|
|
|
|
|
|
CALIFORNIA RESOURCES REAL ESTATE VENTURES, LLC
|
|
|
|
|
|
|
|
By:
|
/s/ Marshall D. Smith
|
|
|
Name:
|
Marshall D. Smith
|
|
|
Title:
|
Senior Executive Vice President and Chief Financial Officer of California Resources Corporation, its Sole Member
|
|
|
CALIFORNIA HEAVY OIL, INC.
CALIFORNIA RESOURCES ELK HILLS, LLC
CALIFORNIA RESOURCES PETROLEUM CORPORATION CALIFORNIA RESOURCES PRODUCTION CORPORATION CRC SERVICES, LLC SOCAL HOLDING, LLC
SOUTHERN SAN JOAQUIN PRODUCTION, INC.
|
|
|
|
|
|
|
|
By:
|
/s/ Marshall D. Smith
|
|
|
Name:
|
Marshall D. Smith
|
|
|
Title:
|
Senior Executive Vice President and Chief Financial Officer of California Resources Corporation, its Sole Member
|
|
|
CALIFORNIA RESOURCES COLES LEVEE, LLC
|
|
|
|
|
|
|
|
By:
|
/s/ Marshall D. Smith
|
|
|
Name:
|
Marshall D. Smith
|
|
|
Title:
|
Senior Executive Vice President and Chief Financial Officer
|
|
|
CALIFORNIA RESOURCES COLES LEVEE, L.P.
|
|
|
|
|
|
|
|
By:
|
/s/ Marshall D. Smith
|
|
|
Name:
|
Marshall D. Smith
|
|
|
Title:
|
Senior Executive Vice President and Chief Financial Officer of California Resources Coles Levee, LLC, its General Partner
|
|
|
CALIFORNIA RESOURCES WILMINGTON, LLC
|
|
|
|
|
|
|
|
By:
|
/s/ Marshall D. Smith
|
|
|
Name:
|
Marshall D. Smith
|
|
|
Title:
|
Senior Executive Vice President and Chief Financial Officer of California Resources Tidelands, Inc., its Sole Member
|
|
|
TIDELANDS OIL PRODUCTION COMPANY
|
|
|
|
|
|
|
|
By:
|
/s/ Marshall D. Smith
|
|
|
Name:
|
Marshall D. Smith
|
|
|
Title:
|
Senior Executive Vice President and Chief Financial Officer of California Resources Tidelands, Inc., its Managing Partner
|
|
|
CALIFORNIA RESOURCES LONG BEACH, INC.
CALIFORNIA RESOURCES TIDELANDS, INC.
|
|
|
|
|
|
|
|
By:
|
/s/ Marshall D. Smith
|
|
|
Name:
|
Marshall D. Smith
|
|
|
Title:
|
Senior Executive Vice President and Chief Financial Officer
|
|
|
CRC MARKETING, INC.
|
|
|
|
|
|
|
|
By:
|
/s/ Danial Adam Smith
|
|
|
Name:
|
Danial Adam Smith
|
|
|
Title:
|
Assistant Secretary
|
|
|
THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as Trustee
|
|
|
|
|
|
|
|
By:
|
/s/ R. Tarnas
|
|
|
Name:
|
R. Tarnas
|
|
|
Title:
|
Vice President
|
|
|
Name
|
Jurisdiction of Organization
|
|
|
California Resources Real Estate Ventures, LLC
|
Delaware
|
|
|
Name
|
Jurisdiction of Organization
|
|
|
California Heavy Oil, Inc.
|
Delaware
|
|
|
California Resources Coles Levee, LLC
|
Delaware
|
|
|
California Resources Coles Levee, L.P.
|
Delaware
|
|
|
California Resources Elk Hills, LLC
|
Delaware
|
|
|
California Resources Long Beach, Inc.
|
Delaware
|
|
|
California Resources Petroleum Corporation
|
Delaware
|
|
|
California Resources Production Corporation
|
Delaware
|
|
|
California Resources Tidelands, Inc.
|
Delaware
|
|
|
California Resources Wilmington, LLC
|
Delaware
|
|
|
CRC Construction Services, LLC
|
Delaware
|
|
|
CRC Marketing, Inc.
|
Delaware
|
|
|
CRC Services, LLC
|
Delaware
|
|
|
Socal Holding, LLC
|
Delaware
|
|
|
Southern San Joaquin Production, Inc.
|
Delaware
|
|
|
Thums Long Beach Company
|
Delaware
|
|
|
Tidelands Oil Production Company
|
Texas
|
|
|
CALIFORNIA RESOURCES CORPORATION, a Delaware corporation
|
|
|
|
|
|
|
|
By:
|
/s/ Marshall D. Smith
|
|
|
Name:
|
Marshall D. Smith
|
|
|
Title:
|
Senior Executive Vice President and Chief Financial Officer
|
|
|
|
|
|
CALIFORNIA RESOURCES REAL ESTATE VENTURES, LLC
|
|
|
|
|
|
|
|
By:
|
/s/ Marshall D. Smith
|
|
|
Name:
|
Marshall D. Smith
|
|
|
Title:
|
Senior Executive Vice President and Chief Financial Officer of California Resources Corporation, its Sole Member
|
|
|
CALIFORNIA HEAVY OIL, INC.
CALIFORNIA RESOURCES ELK HILLS, LLC
CALIFORNIA RESOURCES PETROLEUM CORPORATION CALIFORNIA RESOURCES PRODUCTION CORPORATION CRC SERVICES, LLC SOCAL HOLDING, LLC
SOUTHERN SAN JOAQUIN PRODUCTION, INC.
|
|
|
|
|
|
|
|
By:
|
/s/ Marshall D. Smith
|
|
|
Name:
|
Marshall D. Smith
|
|
|
Title:
|
Senior Executive Vice President and Chief Financial Officer of California Resources Corporation, its Sole Member
|
|
|
CALIFORNIA RESOURCES COLES LEVEE, LLC
|
|
|
|
|
|
|
|
By:
|
/s/ Marshall D. Smith
|
|
|
Name:
|
Marshall D. Smith
|
|
|
Title:
|
Senior Executive Vice President and Chief Financial Officer
|
|
|
CALIFORNIA RESOURCES COLES LEVEE, L.P.
|
|
|
|
|
|
|
|
By:
|
/s/ Marshall D. Smith
|
|
|
Name:
|
Marshall D. Smith
|
|
|
Title:
|
Senior Executive Vice President and Chief Financial Officer of California Resources Coles Levee, LLC, its General Partner
|
|
|
CALIFORNIA RESOURCES WILMINGTON, LLC
|
|
|
|
|
|
|
|
By:
|
/s/ Marshall D. Smith
|
|
|
Name:
|
Marshall D. Smith
|
|
|
Title:
|
Senior Executive Vice President and Chief Financial Officer of California Resources Tidelands, Inc., its Sole Member
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TIDELANDS OIL PRODUCTION COMPANY
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By:
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/s/ Marshall D. Smith
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Name:
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Marshall D. Smith
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Title:
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Senior Executive Vice President and Chief Financial Officer of California Resources Tidelands, Inc., its Managing Partner
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CALIFORNIA RESOURCES LONG BEACH, INC.
CALIFORNIA RESOURCES TIDELANDS, INC.
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By:
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/s/ Marshall D. Smith
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Name:
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Marshall D. Smith
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Title:
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Senior Executive Vice President and Chief Financial Officer
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CRC CONSTRUCTION SERVICES, LLC
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By:
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/s/ Marshall D. Smith
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Name:
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Marshall D. Smith
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Title:
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Senior Executive Vice President and Chief Financial Officer of California Resources Corporation, its Sole Member
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THUMS LONG BEACH COMPANY
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By:
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/s/ Marshall D. Smith
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Name:
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Marshall D. Smith
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Title:
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Senior Executive Vice President and Chief Financial Officer
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CRC MARKETING, INC.
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By:
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/s/ Danial Adam Smith
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Name:
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Danial Adam Smith
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Title:
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Assistant Secretary
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WILMINGTON TRUST, NATIONAL ASSOCIATION, as Trustee
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By:
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/s/ Hallie E. Field
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Name:
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Hallie E. Field
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Title:
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Assistant Vice President
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Name
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Jurisdiction of Organization
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California Resources Real Estate Ventures, LLC
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Delaware
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Name
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Jurisdiction of Organization
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California Heavy Oil, Inc.
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Delaware
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California Resources Coles Levee, LLC
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Delaware
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California Resources Coles Levee, L.P.
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Delaware
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California Resources Elk Hills, LLC
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Delaware
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California Resources Long Beach, Inc.
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Delaware
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California Resources Petroleum Corporation
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Delaware
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California Resources Production Corporation
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Delaware
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California Resources Tidelands, Inc.
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Delaware
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California Resources Wilmington, LLC
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Delaware
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CRC Construction Services, LLC
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Delaware
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CRC Marketing, Inc.
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Delaware
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CRC Services, LLC
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Delaware
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Socal Holding, LLC
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Delaware
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Southern San Joaquin Production, Inc.
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Delaware
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Thums Long Beach Company
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Delaware
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Tidelands Oil Production Company
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Texas
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Six months ended
June 30,
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Year ended December 31,
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||||||||||||||||||||
(in millions, except ratios)
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2018
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2017
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2016
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2015
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2014
(a)
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2013
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||||||||||||
EARNINGS:
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(Loss) income before income taxes
(b)(c)
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$
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(54
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)
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$
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(262
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)
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$
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201
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$
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(5,476
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)
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$
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(2,421
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)
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$
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1,447
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Net income attributable to noncontrolling interests
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(30
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)
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(4
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)
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—
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—
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—
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—
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||||||
Fixed charges
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229
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350
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334
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339
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79
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4
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||||||
Capitalized interest
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(3
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)
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(3
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)
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(2
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)
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(9
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)
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(4
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)
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—
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||||||
Earnings (loss) before fixed charges
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$
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142
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$
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81
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$
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533
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$
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(5,146
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)
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$
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(2,346
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)
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$
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1,451
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FIXED CHARGES
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Interest and debt expense, net
(d)
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$
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224
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$
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343
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$
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328
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$
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326
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$
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72
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$
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—
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Capitalized interest
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3
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3
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2
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9
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4
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—
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Rental expense representative of interest factor
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2
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4
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4
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4
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3
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4
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Total fixed charges
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$
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229
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$
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350
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$
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334
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$
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339
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$
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79
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$
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4
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RATIO OF EARNINGS TO FIXED CHARGES
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n/a
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n/a
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1.6
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n/a
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n/a
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363
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||||||
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INSUFFICIENT COVERAGE
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$
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87
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$
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269
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$
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—
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$
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5,485
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$
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2,425
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$
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—
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(a)
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Note: If we had been a stand-alone company for the full year 2014 and had the same level of debt throughout the year as we did on December 31, 2014, of approximately $6.4 billion, we would have incurred $314 million of pre-tax interest expense, on a pro-forma basis, for the year ended December 31, 2014, compared to the $72 million pre-tax interest expense reported on our statement of operations for the year then ended. Therefore, the insufficient coverage on a pro-forma basis would have been approximately $2,667 million.
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(b)
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The six months ended June 30, 2018 amount includes unusual, infrequent and other items consisting of
$99 million
of non-cash derivative losses on outstanding hedges,
$24 million
of net gains on the early extinguishment of debt and $3 million of other unusual and infrequent charges. Excluding these items, our earnings before fixed charges for the six months ended June 30, 2018 would have been approximately
$220 million
. Therefore, the insufficient coverage would have been approximately
$9 million
.
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(c)
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The year ended December 31, 2017 amount includes unusual and infrequent items consisting of $78 million of non-cash derivative losses on outstanding hedges, $21 million of gains from asset divestitures, $4 million of net gains on the early extinguishment of debt and $26 million of other unusual, out-of-period and infrequent charges. Excluding these items, our earnings before fixed charges for the year ended December 31, 2017 would have been approximately $160 million. Therefore, the insufficient coverage would have been approximately $190 million.
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(d)
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Excludes $38 million of amortization of deferred gains for the six months ended June 30, 2018.
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1.
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I have reviewed this quarterly report on Form 10-Q of California Resources Corporation;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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(a)
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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(b)
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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(c)
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Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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(d)
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Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
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5.
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The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
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(a)
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
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(b)
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
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/s/ Todd A. Stevens
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Todd A. Stevens
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President and Chief Executive Officer
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(Principal Executive Officer)
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1.
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I have reviewed this quarterly report on Form 10-Q of California Resources Corporation;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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(a)
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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(b)
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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(c)
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Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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(d)
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Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
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5.
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The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
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(a)
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
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(b)
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
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/s/ Marshall D. Smith
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Marshall D. Smith
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Senior Executive Vice President and
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Chief Financial Officer
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(Principal Financial Officer)
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1.
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The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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2.
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The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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/s/ Todd A. Stevens
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Name:
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Todd A. Stevens
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Title:
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President and Chief Executive Officer
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Date:
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August 2, 2018
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/s/ Marshall D. Smith
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Name:
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Marshall D. Smith
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Title:
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Senior Executive Vice President and Chief Financial Officer
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Date:
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August 2, 2018
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